A Firsthand Look at Portugal's Drug Policy

And how further liberalization might help its economy.

During a week-long stay in Portugal, where drugs were decriminalized across the board in 2001, I saw just one substance being publicly abused: alcohol.

Portuguese drunks were nowhere to be found. Scottish ones, however, had fanned out across downtown Lisbon, chanting and singing for their soccer team, Celtic FC, after a 2-1 loss to SL Benfica. A group of middle-aged men in green-and-white jerseys verbally abused a hat peddler on Avenida da Liberdade. A rubbery-legged son attempted to hold his near-comatose father upright, who nevertheless managed to avoid spilling his beer. A drooling man in his sixties attempted a conversation with my wife before realizing his mouth didn't work and lost his balance.

Drug tourists? Yes -- only their drug of choice was Sagres, the local beer.

Drugs sold legally, 12 ounces at a time

A decade ago, Paulo Portas, leader of the conservative Popular Party, predicted "planeloads of students heading for the Algarve to smoke marijuana and take a lot worse, knowing we won't put them in jail. We promise sun, beaches, and any drug you like."

"It was… confirmed that Portugal has not become a destination for drug-tourism nor has there been a boom in the number of users following the decriminalization," reported Portugal's Institute on Drugs and Drug Addiction in 2009.

The policy was designed by the Institute's president, Dr. João Castel-Branco Goulão. Though drug consumption is still prohibited under Portuguese law, users are not prosecuted in court and violations do not go on a person's police record.

"Treating drug users as people who are sick, rather than as criminals, resonated with Portuguese society, because the phenomenon cut across all sectors: it was almost impossible to find a family that didn't have a problem with a son or daughter, nephew or niece, or cousin, and the families knew they weren't criminals, but people who needed support," Goulão told the Inter Press Service in July.

In fact, two things have happened over the past 11 years.

"The most disorganized groups of users are gradually starting to approach the treatment centers," Goulão said. "People used to be afraid to contact them, for fear of being reported to the police. But today they come spontaneously, and they don't have any problem identifying themselves."

Secondly, according to Goulão, "The use of almost all illegal substances has been reduced among the youngest segments of the population. There has been a drastic fall in intravenous drug use, and in consequence, in the spread of AIDS. And drug-related crime has also gone down."

Though Brendan Hughes of the European Monitoring Centre for Drugs and Drug Addiction toldTheEconomist that "Proving a causal link between Portugal's decriminalization measures and any changes in drug-use patterns is virtually impossible in scientific terms," he pointed out that "anyone looking at the statistics can see that drug consumption in 2001 was relatively low in European terms, and that it remains so. The apocalypse hasn't happened."

Should Portugal Go Even Further?

"Don't leave anything on the seats; lock everything in the trunk," the manager of a Lisbon Hertz (NYSE:HTZ) advised. "With the economic crisis, people will steal anything."

Those lucky enough to be working (unemployment is a staggering 15%) take home an average monthly wage of 777 euros, or $1,007.92. Add to this brutal tax hikes and severe budget cuts, and the country's near-term economic outlook appears grim.

"We're in a situation of such austerity that many prisoners don't even apply for prison leave because at least their meals are paid inside," Júlio Rebelo, president of a Portuguese correctional officers' union, told the New York Times. "It's the first time I've seen this, but it seems families just don't have the means to welcome prisoners back at home."

The lack of jobs is driving many Portuguese abroad to places like Mozambique, a former colony in southeastern Africa. And reports of women turning to prostitution to pay the bills have recently emerged.

Might Portugal consider further loosening its drug policy, in light of the financial choke hold in which the country finds itself?

Though no one is yet suggesting the mainstreaming of hard drugs, Harvard University economist Jeffrey Miron has estimated that legalizing marijuana in the United States "would save $7.7 billion per year in government expenditure on enforcement of prohibition." Legalization of marijuana would also "yield tax revenue of $2.4 billion annually if marijuana were taxed like all other goods and $6.2 billion annually if marijuana were taxed at rates comparable to those on alcohol and tobacco."

The pharmaceutical industry has had only two cannabis-related products approved for use in the US thus far -- Marinol, a synthetic delta-9- tetrahydrocannabinol capsule developed by Solvay Pharmaceuticals (now part of Abbott (NYSE:ABT)) and marketed as an appetite stimulant for AIDS patients, and Valeant Pharmaceuticals (NYSE:VRX) Cesamet, a cannabinoid that helps relieve nausea in chemotherapy patients. Overseas, England's GW Pharmaceuticals (LSE:GWP) has received approval for Sativex, an oral cannabinoid spray marketed in partnership with Novartis (NYSE:NVS), Bayer (PINK:BAYRY), Neopharm (KOSDAQ:092730), Otsuka Pharmaceutical (PINK:OTSKF), and Almirall S.A. (Almirall), which helps control multiple sclerosis spasticity and cancer and neuropathic pain.

To this end, further acceptance of marijuana-as-medicine might reduce prescription costs, a godsend for struggling countries like Portugal.

"[Pharmaceutical companies] know that marijuana is so versatile in treating everything from Crohn's disease to nausea to premenstrual syndrome that once it can be produced in an economy of scale and free of prohibition tariffs it would sweep all these artificially expensive pharmaceutical products on the market aside," Dr. Lester Grinspoon, professor of psychiatry emeritus at Harvard Medical School and author of the book, Marijuana Reconsidered, told CNBC in 2010.

To be sure, nobody is suggesting that the unfettered use of marijuana is anyone's goal. Anything can be abused, whether it be chocolate, sex, or cannabis. However, when alcohol was legalized in America back in 1933, it wasn't because alcohol was suddenly deemed perfectly safe. It was because, as I saw in Portugal, legalization is far less harmful than prohibition.

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